Gold, iron on a roll
IRON ore and gold prices have continued their surge up the markets.
Iron ore has soared a five-year high, closing out June at US$108.72, and Australian gold prices have surged past the $2000 mark, reaching an all-time Australian dollar high of $2056.
However, for Australian mining, iron ore’s price spike is riding off a wave of instability that gold’s good fortunes have historically future-proofed. Iron ore has had a troubled year. One of, if not the major reason, iron ore is fetching prices not seen since 2014 is due to Brazil’s iron ore juggernaut Vale all but closing for business in the wake of the Brumadinho disaster.
But with Vale’s court injunction which stopped it from using the Laranjeiras dam revoked, the miner could, in theory, return 20mt to the market, tipping the scales back into balance sooner than analysts were predicting.
And while prices have been outstanding in Australia, cracks are beginning to appear in the strength of the export capacity.
Australia will, for the first time since the turn of the century, export less iron ore than the previous year.
This has come as a result of fires, floods and most recently, Rio indicating that it would be reducing its 2019 exports by about 13mt.
Gold, however, has seen a historical revival in the wake of another international volatility – the SinoAmerican trade wars.
As international markets are increasingly destabilised by the USA — China negotiations, and also to some degree Brexit, investors are continuing to turn to gold as a safe haven for larger portions of their investments.
Unlike bonds or stocks, gold’s tangibility is seen to give it inherent value in the face of market uncertainty and collapse.
Despite the recent collapse of some of WA’s most promising mid-tier gold producers, the security of Australian goldmining has been ensured by Tier 1 producers, and the consolidation of Newmont and Gold Corp earlier in 2019.